Dell To Close Desktop Plant

Dell will be closing its desktop manufacturing plant in Austin, Texas, and laying off 900 workers as party of a strategy to cut costs by $3 billion over the nextfew years.   In a blog posting, Lynn Tyson, VP for Investor Relations, wrote:   “Over the last three years, driven by the massive shift in customer preference for notebooks -especially among consumers, industry forecasts for the rate of growth of desktops have declined from 10.8 percent to 3.6 percent.  And the desktop to notebook mix in the U.S. has declined from a70/30 split in 2005 in favor of desktops to a 50/50 split today.  Our fiscal fourth quarter of last year reflects this change as we grew notebook units year over year by 37 percent and desktopsby 10 percent.”   The company believes it will take three years to achieve its goal, which it expects to have in place by the close of the 2011 fiscal year. To date the company has cutover 3,000 jobs, with plans to eventually shed over 8,000 workers, or one-tenth of its entire workforce. The company is the second-largest seller of desktops and notebooks in the world, but hasaltered its sales tack to use retail outlets as well as direct selling to the public.